Amsterdam ranked most fiscally stressed local government in state

AMSTERDAM — The city of Amsterdam was ranked as the most fiscally stressed municipality in New York state in a report released Thursday by state Comptroller Thomas DiNapoli.

DiNapoli's Fiscal Stress Monitoring System ranked local governments with fiscal stress scores of 65 or greater as having significant stress. The city of Amsterdam had a score of 85. No other Capital Region municipality ranked as having significant stress, although the city of Albany (fiscal score 53.3), the town of Colonie (52.5), the city of Watervliet (50.0) and Montgomery County (48.3), were all ranked as being "susceptible to fiscal stress."

The municipalities were rated on fiscal year 2018 data.

The report did not indicate the highest possible score, or give a precise accounting of the scoring methodology. According to the comptroller's office, the fiscal stress score uses two main components: financial indicators and the municipality's economic environment. Financial indicators used included year-end fund balances, operating deficits or surpluses, use of short-term debt for cash flow and fixed costs. Environmental factors included the age of a municipality's residents, poverty levels, property values, employment percentage, constitutional tax limit, sales tax revenue and school enrollment.

Amsterdam has no fund balance of unspent tax revenues, and it has borrowed a $2 million tax anticipation note in each of the last three years to maintain cash flow and meet weekly expenses like payroll. The city has also asked New York state to allow it to borrow at least $8.4 million to pay off its accumulated budget deficit, built up over the past seven or eight budget cycles.

"This is not shocking. We wouldn't have the financial control board coming in or have to go for deficit financing if we weren't on the stress list," Amsterdam Mayor Michael Villa said.

The top five most fiscally stressed municipalities in New York state were:

Score: 85.0, Amsterdam

Score: 81.7, German Flatts

Score: 81.7, Long Beach

Score: 80.8, Suffolk County

Score: 76.7, Niagara Falls

Score: 75.4, Nassau County

In 2017 the comptroller released a report showing Amsterdam had not filed adequate financial reports to rank its fiscal stress for the prior five years.

Villa told The Daily Gazette in March that Amsterdam probably would have been high on the fiscal stress list each of the last ten years if the city had had adequate financial reporting.

Two of the major reasons cited by city officials for the accumulated deficit include the city's failure to foreclose on any properties for six years from 2010-16 and its improper bookkeeping practices, which led to the city paying day-to-day expenses like payroll with money borrowed for capital projects.

City officials have attributed these problems mainly to chaos in the city Controller's Office due to a death, a resignation and turnover following elections.

Villa said his efforts to bring in independent auditors and city Controller Matt Agresta's policies of using proper bookkeeping techniques have revealed the depth of the city's financial woes.

"We've taken the steps we need to take to ensure that we are fiscally OK. We just have to address the ongoing issues that were inherited by this administration," he said.

Villa said he wrote a letter to Gov. Andrew Cuomo last week asking him to move along a home rule law passed by the state Legislature in June that will allow Amsterdam to borrow the money needed to clear the accumulated deficit off its books.

The deficit finance bill comes with strings attached, including requirements the city create three-year financial plans, give the comptroller quarterly reports showing revenues and expenses, and submit the annual city budget to the comptroller for review within 30 days of the last day the budget deadline.

In June the Common Council voted to override the state tax cap to raise Amsterdam's tax levy 7 percent, as part of a $33.1 million 2019-20 budget. The tax increase was aimed in part toward reducing the city's annual budget deficit.

Michael Cinquanti, the Democratic candidate for mayor in November, said he is running against Villa to address the city's financial problems. He said he wants to use his skills from having owned a business for decades to bring greater fiscal discipline to the city and attack the expense side of the city budget.

"I want to get us off that list, and more importantly Amsterdam needs to get off that list in order to do some of the great things we can do," Cinquanti said.

Cinquanti said he believes the budgets under Villa have not provided a clear picture of the city's expenses.

"I'm not going to be a monster, I'm going to be a teacher. I'm going to go in and ask [city department heads] to buy into this. I'm going to ask them to come up with solutions to problems they uncover, and if they don't give me the solutions, that's when I'll do some of the things I have to do, leaving all of my options on the table — hiring freezes, layoffs, whatever it takes," he said.

Villa said he believes economic growth spurred in part by the $10 million Downtown Revitalization Initiative awarded the city by New York state and economic development, such as a proposed 60-apartment building on the city's East end by Rochester-based DePaul Properties, will help grow the city out of its financial troubles.

"I would call that [DePaul] project a repurposing of the neighborhood, and that's what we are going to try to do," Villa said.